Gold Holds Near $5,050 Ahead of US Nonfarm Payrolls
Gold prices rebounded during Wednesday's Asian session, holding around the $5,050 per ounce zone, as the US dollar weakened, fueled by expectations of looser monetary policy from the Federal Reserve. This movement allowed gold to recover some of the previous session's slight decline, although gains were likely limited as the market awaited the release of US employment data.
One of the main triggers came from consumption data. US retail sales in December were unchanged at 0.0%, below market expectations, after rising the previous month. This data reinforces the view that consumer spending momentum is cooling, opening room for the market to re-increase the probability of future interest rate cuts.
The weakening data reinforces the "rate cuts" narrative, which typically supports gold because the precious metal does not yield interest. Meanwhile, the US dollar is still struggling to recover after weakening in recent sessions, providing additional tailwinds for gold prices.
Market sentiment was also influenced by the renewed issue of central bank independence, following comments by US President Donald Trump regarding Fed Chair nominee Kevin Warsh, which has raised investor attention to the direction of interest rate policy. This issue adds a layer of uncertainty that tends to cause some market participants to maintain safe-haven exposure.
However, the tone of some Fed officials has not been entirely consistent. Several statements emphasized that interest rates could remain on hold for longer while awaiting confirmation from further data, so the market is still holding back from pushing gold up too aggressively before receiving new "evidence."
Therefore, today's primary focus is on the Nonfarm Payrolls (NFP) report. If the employment data comes out weaker, the possibility of a "more dovish Fed" could strengthen and open up room for further gold gains. However, if the data is solid, the dollar and yields could potentially strengthen again and restrain gold's progress in the short term. (asd)
Source: Newsmaker.id
